Are We On the Verge of the Chinese Century?
November 3, 2017

With China’s 19th Communist Party Congress behind us and President Xi Jinping, now firmly established as China’s most powerful leader since Deng Xiaoping, proclaiming China’s intention to take its rightful place on the world stage, many are asking if we are on the verge of a new "Chinese Century."

First, the affirmative case. China is already the world’s second largest economy, and although growth has slowed, it is still over 6 percent per year, which means it will soon be the world’s largest economy (by some measures it already is). And China has a clear strategy to reassume what it views as its rightful place at the center of the world’s trade and commerce and as the dominant power in Asia.

Their military is growing, as is their international influence, while the U.S. administration seems to be floundering. China is increasing its presence in international institutions like the World Bank and the IMF while the United States is reducing its own, as was noted by observers at the annual WB/IMF meetings held in Washington earlier this month. China has assumed a leadership role in implementing the Paris Climate Accords, following the withdrawal of the United States.

China is moving to dominate a number of key emerging industries like lithium ion batteries, solar panels, and clean energy technology more generally.

China is engaged in a very aggressive program called One Belt One Road (OBOR) to create a modern version of the silk road. Remember that when the original silk road was at its height in the Tang dynasty, China was in fact at the center of the world as the most developed country in the world by far at that time. China has also created a new Asia Infrastructure Investment Bank (AIIB) to help support OBOR, and is pouring huge amounts of money into its development.

The overland part of OBOR will ultimately traverse the entire Eurasia land mass by high-speed rail, all the way from eastern China to Urumqi, across central Asia and the Middle East, and on to Europe. There will also be a sea route going through the South China Sea, across the Indian Ocean to Africa, up through the Suez Canal to the Mediterranean and then on to Europe.

In addition to ultimately strengthening China’s position as the world’s leading trading nation, OBOR includes a series of massive infrastructure projects that will allow China to export its engineering and construction capabilities, and strengthen ties with key countries along the way. For example, there was a report a few months ago that Sri Lanka’s government approved a new $1.5 billion deal with a Chinese port company for construction and operation of a port and adjoining industrial zone that will be part of the maritime silk road.

China is also strengthening its naval presence to defend these sea lanes. In May, China held an OBOR conference in Beijing, attended by a number of world leaders including Russian President Vladimir Putin, Turkish President Recep Tayyip Erdoğan, and many others. At the meeting, President Xi announced an additional $124 billion in funding for the OBOR initiative. The United States has not been an active participant in OBOR, and is not a member of the AIIB.

China is also dangerously short of water, and could face a serious water crisis by 2030.

China also has very clear and aggressive plans on the economic front as well. China is moving to dominate a number of key emerging industries like lithium ion batteries, solar panels, and clean energy technology more generally. They have a policy called "Made in China 2025," an initiative to comprehensively upgrade Chinese industry in general, with a specific focus on 10 priority sectors: 1) new advanced information technology; 2) automated machine tools and robotics; 3) aerospace and aeronautical equipment; 4) maritime equipment and high-tech shipping; 5) modern rail transport equipment; 6) new-energy vehicles and equipment; 7) power equipment; 8) agricultural equipment; 9) new materials; and 10) biopharma and advanced medical products.

I could go on in this vein, but let’s also look at the other side. China faces huge challenges. China faces corruption on an unprecedented scale. In 2012, the central bank accidentally posted a report (which was taken down within an hour) estimating that between 1990 and 2012, 18,000 corrupt officials fled the country, having stolen $120 billion. Despite Xi’s crackdowns, those numbers are far higher now. Recently, there was a report in The New York Times that under Xi’s reign, over 1.5 million officials have been investigated for corruption.

China has huge environmental problems. Everyone has seen pictures of the smog in Beijing and other northern cities. There was a study a couple of years ago that found that 1.6 million people in China die each year from heart, lung, and stroke problems because of polluted air. China is also dangerously short of water, and could face a serious water crisis by 2030. The south is a relatively lush, lake-filled region, but the north—which has half the population and most of the farmland—is more like a desert. The international definition of water stress is 1,000 cubic meters of usable water per person per year. The average northern Chinese has less than a fifth of that amount.

China seems like an unstoppable juggernaut, much like Japan in the 1980s, and we saw how that turned out.

China also has a big demographic problem. The number of elderly is expected to rise from approximately 200 million now to 300 million by 2025. The median age in 1990 was 21.9 years; by 2050 it will be 48. And because of the one-child policy, among the cohort entering adulthood in 2020 will be some 30 million more men than women. Historically, imbalances like this have led to violence.

There are many other challenges as well. For example, within two generations, China has been transformed from one of the world’s most equitable countries in terms of income distribution to one of the least. China faces shortages of natural resources; the side effects of large-scale, rapid urbanization; inadequate healthcare and social welfare; concerns about food and product safety; ethnic conflicts; and on and on.

Finally, the crackdown on the internet, and censorship more generally, pose a long-term problem as China moves up the value-added ladder and tries to compete with cutting edge companies. The free and rapid flow of information is critical to compete at that level. The influence of the Party is continuing to grow, even inside private businesses -- also an impediment to competing in the A League.

So: are we about to enter the Chinese century? Clearly this is a complicated question. China’s economic and military power, and its international influence, continue to grow, while U.S. influence wanes. It seems like an unstoppable juggernaut, much like Japan in the 1980s, when we saw many books like Japan as Number One: Lessons for America declaring the demise of the United States and the beginning of the Japanese century. We saw how that turned out. China, like Japan at that time, faces enormous challenges. I suggest we hold off a bit longer before concluding that we are entering the Chinese century.

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Ira Kasoff is a Pacific Council member, a Senior Counselor at APCO Worldwide, and the former Deputy Assistant Secretary of Commerce for Asia. He was part of the first group of scholars sent to China following the re-establishment of diplomatic relations in 1979.

The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of the Pacific Council.

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